FMTX
Forma Therapeutics Holdings Inc
Price:  
20.01 
USD
Volume:  
739,166.00
United States | Biotechnology
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FMTX WACC - Weighted Average Cost of Capital

The WACC of Forma Therapeutics Holdings Inc (FMTX) is 9.0%.

The Cost of Equity of Forma Therapeutics Holdings Inc (FMTX) is 13.90%.
The Cost of Debt of Forma Therapeutics Holdings Inc (FMTX) is 5.00%.

Range Selected
Cost of equity 11.60% - 16.20% 13.90%
Tax rate 9.90% - 24.70% 17.30%
Cost of debt 5.00% - 5.00% 5.00%
WACC 8.0% - 10.0% 9.0%
WACC

FMTX WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.68 2.02
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.60% 16.20%
Tax rate 9.90% 24.70%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 8.0% 10.0%
Selected WACC 9.0%

FMTX's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for FMTX:

cost_of_equity (13.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.68) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.